Dáil Éireann Debate, Thursday - 28 April 2022
27. Deputy Rose Conway-Walsh asked the Minister for Finance if he will consider providing a tax exemption for apprenticeship allowances during participants' off-site training; and if he will make a statement on the matter. [21407/22]
Amharc ar fhreagraI am advised by the Minister for Further and Higher Education, Research, Innovation and Science that the position in relation to apprentice 'off-the-job' training payments and allowances is as follows:
- Craft apprentices alternate between ‘on-the-job’ training with an employer and ‘off-the-job training’ in an education centre.
- For apprentices on apprenticeships before 2016, their sponsoring employer pays the apprentice while they are being trained ‘on-the-job’. While the apprentice is attending ‘off-the-job’ training, an ‘off-the-job’ training payment is paid every two weeks by the Education and Training Board through the Department of Education.
- 'Off-the-job' payments are aligned to gross wages paid by industry in each sector. All 'off-the-job' training payments are subject to statutory deductions of Income Tax, PRSI and USC. The rate of tax that is paid will depend on the apprentice's own personal circumstances.
- In some cases, the Education and Training Board will also contribute an ‘off-the-job’ training allowance to an apprentice's travel and accommodation costs. All 'off-the-job' training allowances are not subject to statutory tax deductions.
- For Revenue purposes, 'off-the-job' training is registered as a separate Department of Education employment to that of the apprentice's sponsoring employer. Appropriate changes to tax credits and/or rate bands between multiple employments can be made through Revenue's myAccount system.
In contrast, apprentices who began apprenticeships from 2016 onwards are paid by their employer for the duration of their apprenticeship. As such, they would not be in receipt of payments from the Education and Training Board for 'off-the-job' training. The rate of pay is agreed between the apprentice and their employer.
In relation to the Deputy's question in respect of providing a tax exemption for apprenticeship allowances paid during off-site training, it is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation.
Ireland has one of the most progressive personal income tax systems in the EU and OECD. This means that Ireland’s tax system is designed to ensure that those on lower incomes pay less tax than those who earn more.
My Department's Tax Expenditure Guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures and where a tax-based incentive is more efficient than a direct expenditure intervention.
In the circumstances, I have no plans to provide for an exemption along the lines suggested by the Deputy.
